Amazon: Hey, Gang - Let's Put On a Show!

Amazon is taking the long-expected step of developing its own content for Amazon Instant Video.

It is doing so via its content development division, Amazon Studios, which uses audience feedback to suggest content for its customers. Now it has pushed this model further, though, inviting series creators to upload proposals for comedy and children's programming. Those selected will be distributed through Amazon Instant Video. Each month, Amazon Studios will option one new project to be tested for viability with an audience.

If Amazon Studios elects to distribute a series, the creator will receive US$55,000, as well as up to 5 percent of Amazon's net receipts from toy and t-shirt licensing and other royalties.

Entertainment industry veteran Joe Lewis is leading the new series development, along with Tara Sorensen, formerly with National Geographic Kids.

Amazon did not respond to our request for further details.

Keeping Pace

At first blush, this move appears to be Amazon's way of keeping pace with competing services, such as Hulu and YouTube, which have been developing their own original and branded content for some time.

However, there is more at work here than just competitive tit-for-tat, Philip Napoli, professor of communication and media management at
Fordham University's graduate business school, told the E-Commerce Times.

Next-Gen Vertical Integration

"What we're seeing is the next generation of vertical integration in the media," Napoli explained. "Just as, 20 or so years ago, the broadcast networks found it beneficial to vertically integrate upward by merging with production studios, and downward, by acquiring more and more of their local affiliate stations, so to are online content distributors like Netflix, Hulu and now Amazon finding it advantageous to supply themselves with content to distribute."

The goal is to become free of the high costs of being dependent on unaffiliated content providers, as well as reap the revenues associated with both the production and the distribution of programming, he said -- pointing to, as one example, the long shelf life of episodes of "The Simpsons."

It is a push akin to the way most cable networks went from being a source of Hollywood movies and TV reruns to developing original programming, said Napoli.

Now the online program distributors have reached a similar stage in their evolution and feel they are in a position to leverage their distribution channel for content production, he concluded.

'Amazon Knows Everything About You'

Amazon is one step ahead of its competitors in this process because it already knows so much about its customers' tastes, said Scott Lorenz, president of
Westwind Communications.

"They know what books you bought, which ones you reviewed, which ones you gave to friends, and what you were even 'thinking' about buying," he told the E-Commerce Times.

"They know your address, your friend's address and they have your Kindle address. They probably know more about you than your best friend. So, when it comes to Amazon TV, they'll probably be able to deliver exactly what you were thinking about at just exactly the right time."

It also has an excellent marketing program in place, Lorenz added. "I get two to three emails from Amazon every day. When was the last time NBC sent you note about a TV show?"

The Amazon Prime Factor

The content Amazon develops will also be a boost to its Amazon Prime program, predicted Ben Bogardus, an assistant professor of journalism at
Quinnipiac University.

"Amazon can market the shows it creates as something you can only get by subscribing to its service," he told the E-Commerce Times. "It's the same idea behind HBO and Showtime producing original programming. It's an added bonus you can only get by subscribing."

What Customers Want

Of course, for all these wonderful things to happen for Amazon, it first must create content that people actually want to see.

"Having exclusive content is great, but gets you nowhere if it's a bad show or no one wants to watch it," Bogardus said. "In order to compete with the networks or cable, Amazon will have to spend a lot of money on good scripts, big-name actors, movie-quality production values and advertising."

People won't tune into Amazon to see lousy shows, in short, no matter how many friendly emails Amazon sends.